Okay, this REALLY is my last post! Compaq may announce new CEO on July 28
By Joe Wilcox
Staff Writer, CNET News.com
July 15, 1999, 3:50 p.m. PT
Compaq Computer is gearing up to announce a new chief executive
when it reports second quarter earnings on July 28, sources close to the
company said.
But the plan is contingent on concluding negotiations with the company's
leading candidate Peter Hellman, former president and chief operating
officer of TRW, said sources close to Compaq.
For the first time since Gregory
Brenneman, president of Continental
Airlines, removed himself as a
contender, Compaq appears close to a
decision. Sources close to Compaq said
the board wanted Brenneman.
Although efforts to right itself remain far
from over, Compaq appears to be
making progress. On June 29, Compaq
sold a controlling interest in AltaVista to
CMGI for $2.3 billion.
The stock has risen from a 52-week low
of $20 in June to above $27. Compaq is
expected to report a loss of 11 cents a
share for the second quarter, according
to a poll of analysts on First Call, a slight
upgrade from the consensus estimate of
a 12-cent loss earlier this month.
Mike Winkler, one of the heads of the three new Compaq divisions, said on
Tuesday that Compaq is "getting close" to a CEO decision, according to
International Data Corporation analyst Roger Kay. Other sources close to
Compaq have said that the goal has become to announce the new CEO
when the second quarter earnings come out on July 28. Compaq announces
earnings before the market opens.
Following the April 18 ouster of chief executive Eckhard Pfeiffer, board
members Ben Rosen, Frank Doyle, and Ted Enole, acting as the Office of
the Chief Executive, have orchestrated the latest Compaq moves. Rosen will
reportedly stay on as chairman.
Jeff Christian, CEO of Christian & Timbers, the company searching for HP's
next chief executive, said Compaq faces a number of obstacles in its search,
including resistance to possible board oversight and the fact that the firm is
based in Houston.
"The location makes Compaq more difficult, and the financial performance
makes it more difficult," said Christian. "It all depends upon the board and
their expectations and is the [CEO] search firm and Compaq in sync on their
expectations."
Compaq will be a tough turnaround, Christian said, and will require a chief
executive looking to make a name for himself. Also, "Compaq has a lot more
rebuilding to do in its management team. They've lost a number of key
people."
In a June 17 reorganization, Rosen and company sought to shore up
Compaq's weakened management team by placing heads over three newly
formed divisions: Winkler over the Personal Computer Group, Mike Larson
over the Consumer Group, and Enrico Pesatori over the Enterprise and
Services Group.
The three senior vice presidents and group managers have been conducting
on-going reorganization meetings that increasingly make Compaq more like
three companies in one larger organization. Senior Enterprise and Services
Group managers, for example, met with Pesatori this week as part of an
on-going strategy session.
Hellman, who made a name for himself at TRW by dissecting
underperforming divisions and refocusing the company, would have to
embrace Compaq's new three-in-one structure.
Another possible candidate is Larry Weinbach, chief executive of Unisys.
Unisys has become something of a favorite with some analysts by showing a
rebound in growth.
The company announced its second-quarter earnings today with a 58
percent increase in diluted earnings, or 38 cents a share. Periodic rumors
have circulated over the years that Compaq might buy Unisys, which
has worked with Compaq on various projects, for its service expertise.
One of the last times a rash of Compaq-Unisys rumors circulated,
however, Compaq bought Digital.
Atiq Raza, who resigned as president of AMD yesterday, has also
emerged as a remote possible candidate for the job.
Compaq was not available for comment on the Unisys rumor or
status of its CEO search. A Compaq spokesperson said yesterday the
company does not comment on rumor or speculation.
Related news stories
• Compaq picks new CIO as chief decision looms July 9, 1999
• Compaq still dogged by Digital transition July 6, 1999
• Lack of CEO doesn't slow Compaq changes June 28, 1999 |
